SEATTLE _ The Seattle City Council unanimously approved a pioneering new income tax on wealthy residents Monday. A legal challenge is widely anticipated, as neither Washington state nor any of its cities collects an income tax.
The measure applies a 2.25 percent tax on total income above $250,000 for individuals and above $500,000 for married couples filing their taxes together.
The city has estimated the tax will raise about $125 million a year and cost $10 million to $13 million to set up, plus $5 million to $6 million per year to run and enforce.
The council's finance committee cleared the tax last week, increasing the rate from 2 percent to 2.25 percent.
Opponents have argued the tax would violate state law and the state constitution, while proponents have said it would make Seattle's tax structure more fair and want to make it a test for the legality of taxing income.
The recent push for an income tax began in February, when nonprofits and labor unions calling themselves the Trump Proof Seattle coalition launched a campaign. The coalition said the revenue could offset threatened cuts by President Donald Trump's administration, and held town hall events in every council district to drum up support.
A boost came in April, when Mayor Ed Murray, during a mayoral candidate forum, said he would send income tax legislation to the council. Earlier that week, former Mayor Mike McGinn, who's running again this year while Murray is not, had come out in support of the tax.
Under the legislation, money from the tax could be used by the city to lower property taxes and other regressive taxes; address homelessness; provide affordable housing, education and transit; replace federal funding lost through budget cuts; create green jobs and meet carbon-reduction goals; and administer the tax.
In a statement after the 9-0 vote, Murray said Seattle is "challenging this state's antiquated and unsustainable tax structure by passing a progressive income tax." He added that the goal is to replace a regressive tax system with a "new formula for fairness."
A lawsuit will likely emerge in the next week or so, brought by a Seattle individual or business, said Jason Mercier, director of the Center for Government Reform at the conservative Washington Policy Center, which opposes the tax.
There are three key legal barriers, according to Mercier: The state constitution says taxes must be uniform within a class of property; a 1984 state law bars cities from taxing net income; and cities must have specific state authority to enact new taxes.
"We are greatly disappointed the Seattle City Council voted to impose a clearly illegal and unnecessary income tax," said Dann Mead Smith, Washington Policy Center president, in a statement. "As a lifelong Seattle resident, it is frustrating to see the Seattle City Council choose to waste taxpayer dollars on lawsuits for an income tax that is not needed."
Supporters rallied outside City Hall before Monday's vote, waving signs and cheering.
"When we fight, we win!" they chanted with Councilwoman Kshama Sawant, who said more public pressure may be needed.
"If we need to pack the courts, will you be there with me?" she asked.
Karen Taylor, 34, was in the crowd holding a sign with a Seattle Times headline dating to the early 1900s: "Why don't you come through with a little bit of the wealth Seattle has given you, rich man?"
The Judkins Park resident said she's struggling to stay housed while "the wealthy aren't paying their fair share."
"Whoever goes against this is openly causing suffering," Taylor said.
Washington State Republican Party chair Susan Hutchison plans an afternoon news conference outside City Hall. She'll call on Seattle residents to "forcefully resist the tax" by signing a petition in opposition, according to a news release.
In a KING 5/KUOW poll last month, 66 percent of 900 Seattle adults who took part expressed support for a city income tax on the wealthy, while 23 percent were against it and 12 percent weren't sure.
There were about 11,000 individuals in Seattle with earned annual incomes of at least $250,000 in 2015, according to U.S. Census Bureau data. The Seattle tax would cover both earned and unearned income.
"Washington has among the most regressive tax systems in the United States," the legislation states, citing research by the Institute on Taxation and Economic Policy.
In 2015, Washington households with incomes below $21,000 paid 16.8 percent of their income in state and local taxes, on average, while households with income above $500,000 paid only 2.4 percent, according to the organization.
